Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Tyler Hojo - Sidoti & Company.
Tyler Hojo – Sidoti & Company
In regard to some of the capacity reductions that we keep reading about in the papers. I know you don’t have exposure to CFM56 but what do you think, how do you think this plays out for you after Labor Day, just in terms of capacity coming off line?
Thomas A. Gendron
Tyler, first of all, we are on CFM56. What we are not on in any quantity or any significance is the JT8 fleet, so that would be like your MD80s, you DC9s, your old original 737s. Those are the worst fuel efficient of all the aircraft that are being parked. So those really have negligible to no impact on us.
What we saw here in the last quarter were some announcements for 737 Classics. That would be with the CFM56-3 engines. We do have good content on that engine. So that’s the one we’re referring to. Some of those are being parked.
Our anticipation is that those will be picked up elsewhere in the world, the leasing companies will place those elsewhere. So we think it is a temporary drop and we don’t think it’s going to be significant and we think the increase we’re seeing in the OEM side of our business will more than offset that.
So, right now we’re seeing continued growth in there. Under terrible scenarios, could we see a lot more aircraft parked? That’s possible, I guess. But right at the moment we’re not anticipating a dramatic increase in parked aircraft where we have high content.
Tyler Hojo – Sidoti & Company
Last week during GE’s report, they were saying they anticipated something like $100 million headwind in the back half of their calendar year. Do you think the impact would be somewhat similar to your business? Or you’re just not seeing what they’re seeing, is that what the read is here?
Thomas A. Gendron
Well, I think we see some of it. I think you probably have is the scale difference, on the engine manufacture side. They make huge amounts of their profit on the blades, blade replacements.
We make our money on repairing the control systems. It’s not the same order of magnitude that they have. Obviously we make good money on that. But we right now anticipating that we’re going to continue to grow, going forward into the next year.
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